Silver prices also dipped below the Rs 35,000-level by tumbling Rs 300 to close at Rs 34,900 per kg on poor offtake by industrial units and coin makers.

Traders said weak trend overseas where gold fell to a one-month low mainly led to a drop in precious metal prices. Trading volume saw a decline as investors restrained themselves from making big moves before Federal Reserve policy meet next week, they added.

Globally, gold lost 0.5 percent to settle at USD 1,103.30 an ounce after touching USD 1,097.70, the lowest level since August 11 in New York in yesterday's trade.

Easing demand from jewellers and retailers also dampened sentiment, they said. In the national capital, gold of 99.9 and 99.5 per cent purity plunged by Rs 100 each to Rs 26,360 and Rs 26,210 per ten grams respectively, a level last seen on August 19.

Sovereign, however, held steady at Rs 22,100 per piece of eight grams. Following gold, silver ready dropped by Rs 300 to Rs 34,900 per kg and weekly-based delivery by Rs 535 to Rs 34,950 per kg. Silver coins also nosedived by Rs 1,000 to Rs 50,000 for buying and Rs 51,000 for selling of 100 pieces.